LAS CRUCES — The start of a new legislative session is typically a time when local officials look forward to getting the funding they need for critical street, water, building and other infrastructure projects. Not this year.

“At this point, we’re just hoping to stay flat with what we got last year,” said Jess Williams, a spokesman for Doña Ana County.

The 53rd Legislature will open at noon Tuesday, with Democrats enjoying the majority again in the House of Representatives following November’s election. Republican Gov. Susana Martinez will deliver her seventh State of the State Address on Tuesday afternoon.

All of the hopes and dreams that usually accompany a new session are tempered this year by the state’s persistent budget problems. Revenue continues to come in well below expectations. Lawmakers will need to cut about $70 million from the budget for the current fiscal year, and will be looking at additional cuts for the upcoming year.

Sen. Mary Kay Papen, D-Las Cruces, who is expected to be re-elected as president pro tempore, said because of the budget problems, they may not pass a capital outlay bill this year.

“There’s really no money, so people looking to the Legislature to fund large projects, that probably won’t happen this year unless oil and gas or something gives us a strong input of money,” she said.

That would not be a big problem, Las Cruces Mayor Ken Miyagishima said.

“We saw the handwriting on the wall,” he said. “We started two years back trying to be more sustainable and less dependent on the state.”

What would be a big problem, he said, is if the state reneges of its “hold harmless” payments, as Martinez has proposed.

Hold harmless

When the state repealed the gross receipts tax on food in 2004, it agreed to make “hold harmless” payments to cities and counties to compensate for their lost revenue. In 2013, they voted to phase out those payments, while giving local governments the right to increase taxes.

The city of Las Cruces and Doña Ana County both passed increases of three-eighths of 1 percent, the highest allowed. Now, as part of her plan to balance the budget, Martinez is proposing that the payments be reduced for those entities that have passed a tax increase.

“This is just phase two of their broken promises,” Miyagishima said. “Phase one was when they ended the hold harmless payments.”

Miyagishima said the reason they moved so quickly to pass the tax hike was they were concerned all along that the state would not keep its commitments. If the state moves forward with the proposal, it would cost the city more than $1 million a year, the mayor said.

“This is why citizens don’t trust government,” he said. “Here we are the city, and we can’t even plan on what the state tells us because they want to change the rules.”

Williams said the county had the same concerns.

“That would be an adverse impact in a year when not only the state is lean but the county is lean too,” he said. “We would hope that we would be compensated, given the fact that it was the Legislature that took away the hold harmless and promised it would be phased out."

Williams said that, like the city, they were less concerned with the possible loss of capital outlay.

“What we want to do is maintain the level of services that we are providing to the community,” he said.

Rep. Bill McCamley, D-Las Cruces, said he would oppose the proposed change.

“It would be very inconsistent for the Legislature to say one thing in 2013 and another in 2017,” he said. “As an ex-county commissioner, it’s really hard on local officials to make decisions if the state is constantly moving the goalposts. You can’t plan for things like police and libraries and fire departments.”

Senate Finance Committee Chairman John Arthur Smith of Deming, who has for some time questioned the hold harmless payments, said he understands the governor’s concerns.

“But I’ve had personal conversations with her and said, 'governor you can not get retribution. The horse is out of the barn,'” he said. “But, she has not backed off on that. That is part of her solvency package.”

Smith said he was confident the proposal wouldn’t come out of the Senate Finance Committee.

Budget

The plan of attack when the session starts is for the Senate to go to work first on plugging the hole in the Fiscal Year 2017 budget, while the House begins works on the FY 2018 budget, Smith said. The challenge for the Senate is that it’s difficult to determine just how large the hole is.

“Revenues are still dropping,” he said. “We’re down 8 percent year over year, so it’s a moving target."

The estimate is that they will need $69 million to $70 million just to get to balance. But the goal will be to get to $250 million, to build some reserves, he said. That can all be accomplished through budget cuts and sweeps of existing funds, Smith said.

For their initial FY 2018 budget, legislators have left $123 million undetermined, with the hope that there will be some new revenue source. If nothing is passed and signed, it will require more cuts.

As of Thursday afternoon, 10 different pieces of legislation had been prefiled in the House and Senate proposing different ways to generate revenue. Proposals included both increases to various taxes and fees, as well as tapping into the state’s permanent fund.

Papen, said there is no consensus heading into the session on what is the best way to increase revenue, but there is agreement that it needs to be done.

“I think there’s a consensus, certainly, that we need to do something to try to enhance revenue in the state,” she said. “I know the governor has been adamant about no new taxes, but we’re looking as to are there some areas where we can raise some taxes, not by a large amount, but can we try to make sure that we have the funds available for those programs.”

In a press release accompanying her budget proposal last week, Martinez said her plan would balance the budget without raising taxes. “This sends a message that it’s up to state government to tighten its own belt — not our hardworking families,” she said in a prepared statement.

But, the governor’s proposal includes plans such has the one to end hold harmless payments that have not been well-received by the Legislature.

Smith said he would work hard to seek a solution that has widespread agreement.

“My goal is to have something come out of the Senate with a truly bipartisan vote, to send a message to the fourth floor (governor’s office) that the Senate is moving closely together,” he said.